Prospect

We're hiring a Founding Engineer at Prospect! Come work with us in NYC and help startup employees everywhere navigate the world of equity.

“Should I leave my current startup?” I get asked this question a lot these days. Employees know spending years at a startup that doesn’t pan out has a high opportunity cost, but are wary of jumping ship too early. Rather than relying on rules of thumb, we looked at how four metrics impact a startup's odds of growing their valuation: 1. Layoffs 2. Down round 3. >3 years between funding rounds 4. Headcount growth

Matthew Modawell wanted to get out of finance and break into startups. He moved to San Francisco in 2017 and worked at three startups that failed. Along the way, he learned to think like an investor when evaluating startup jobs. He looked at which top VC firms–and their partners–invested in a company, how big the market could grow, and looked for second time founders. This led him to join Rippling in 2019, where he’s been a top sales rep for almost five years. We chatted with Matt about his job searches and everything he learned along the way in the first installment of our employee retrospectives series: https://lnkd.in/g_w2sbgq

Reading the tech news the past few months, you see stories of layoffs and plummeting valuations. Despite this, now is the best time in at least the past five years to join a startup. While most coverage has focused on low valuations being a bad thing for founders and existing employees, new employees joining a growth stage startup in 2023 could receive nearly three times the equity they would have received joining a similar stage startup in 2021. Investors say that entry prices matter. As an employee who owns equity, you’re an investor, so they matter for you too. Thinking like an investor, you should break valuation down into its component parts, revenue and revenue multiple. What does this mean for you in 2023? Lower valuations are being driven by a market-wide correction away from unrealistic 2021 multiples toward more realistic multiples. This can mean dramatically better entry prices for employees at growth stage startups.